Taxpayer ombudsmen collaborate across departments to jointly assist taxpayers in resolving tax disputes
The National Taxation Bureau of Taipei (hereinafter referred to as the Bureau) under the Ministry of Finance stated that if taxpayers are facing tax disputes or have concerns about filing a complaint and seeking administrative relief, they can request assistance from the tax collection agency for taxpayer rights protection. This can help with communication, coordination, or addressing any doubts. The taxpayer ombudsmen of the Bureau have recently launched interdepartmental collaboration to jointly assist taxpayers in resolving disputes arising from the taxation of pension income.
The Bureau explained that companies’ payments of salaries and wages to employees are categorized as “Category 3: Income from salaries and wages,” as specified in Paragraph 1 of Article 14 of the Income Tax Act. This income is calculated based on various types of salary and wage income obtained from duties or work, with the taxable amount being the remainder after deducting the special salary/wage deduction. Resignation pay received by individuals in a lump sum is categorized as “Category 9: Separation Income,” as specified in the same article, where a fixed exemption applies to such lump-sum separation income.
The Bureau further explained with an example: Party A’s consolidated income tax for 2022 was audited by the Bureau, which determined that additional tax payments were required. The reason is that Party A’s separation income was reported by Company B, known as Party A’s company, as income from salaries and wages. Party A therefore asserted to the Bureau that the originally approved income from salaries and wages, which amounted to approximately NT$4,000,000, included separation income of around NT$2,500,000. Believing that the fixed exemption should apply to such lump-sum separation income, Party A stated that the originally approved income and tax payable amounts were incorrect. This statement was supported by resignation and income payment data from Company B. Upon learning of this taxation dispute, the Bureau’s taxpayer ombudsmen, based on Party A’s assertion and provided evidence, conducted an online meeting with the taxpayer ombudsmen of Company B’s tax authority (hereinafter referred to as the tax authority) and the reviewing officials to discuss whether the disputed amount should be classified as income from salaries and wages or as separation income. After the discussion, it was determined that Company B had provided Party A with an additional bonus upon Party A’s resignation without setting regulations for the distribution of separation income (which, if Party A had served the company for more than 5 years, was recognized as an additional bonus payment according to the agreement between Party A and Company B). Since this income was intended as compensation for Party A’s termination rather than for labor services, it was treated as resignation pay despite being labeled as a “bonus.” Therefore, after evaluating its economic substance, the disputed income should be classified as separation income. The tax authority then guided Company B in correcting the “Withholding and Non-Withholding Tax Statement” for income from salaries and wages. Based on the lump-sum separation income taxation regulations, the Bureau calculated the fixed exemption, which amounted to approximately NT$1,400,000, and the separation income, which amounted to approximately NT$1,080,000.
The Bureau reminds that its website (https://www.ntbt.gov.tw) features a “Taxpayer Rights Protection” section, which includes application forms and information provided by taxpayer ombudsmen, as well as stories about taxpayer rights protection categorized by tax items and business types. The Bureau welcomes all citizens to refer to and utilize these resources.
(Contact Person: Chief Wu of the Legal Affairs Division; Telephone: 2311-3711 Ext. 2061）
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=7038d986cdb340858ea3c220c0113557